The Abbott government has hosed down a call from a key policy adviser for it to lift the pension age to 70 to meet the economic costs of the ageing population.

The Productivity Commission, which the Abbott government has commissioned to conduct reviews of the childcare and industrial relations systems, recommended in a report released on Friday that the government consider raising the age at which people can access the pension to 70 by 2035. The pension age is already due to climb to 67 by 2023.

But a spokeswoman for Treasurer Joe Hockey said the government had no plans to increase the pension age.

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''We have no plans to change the age,'' the spokeswoman said, adding that the commission was ''an adviser to government, it's not the government'.'

Unions have already rejected the call with ACTU president Ged Kearney saying while life expectancy may have risen, the ability of Australians to continue to work in physically demanding jobs had not risen with it.

''How can construction workers be expected to haul concrete around a work site or a childcare worker keep up with a room full of kids until they're 70?'' Ms Kearney said.

''If the Government wants to reduce budget pressures as the population ages, it should strengthen the superannuation system rather than raise the pension age.

''A strong superannuation system lets ordinary workers retire with security and quality of life and takes pressure off the pension system.''

Ms Kearney said the government should reduce superannuation tax concessions that disproportionately benefit high-income earners and move as quickly as possible to lift the compulsory superannuation contribution to 12 per cent.

The Abbott government has deferred the increase of the compulsory superannuation contribution to 12 per cent for two years. It will now take effect in 2021. The Coalition has also promised to axe a superannuation tax break worth up to $500 a year to 3.6 million low income earners.

National Seniors chief executive Michael O'Neill said raising the pension age without first tackling the issue of mature age employment would merely shift older Australians ''from one form of welfare to another''.

''It is naive to suggest that simply raising the pension age will boost productivity,'' Mr O'Neill said.

''Currently, older Australians want to work but no one will hire them. Lose your job at 50 and the odds are stacked against you getting another one.''

The Combined Pensioners and Superannuants Association also canned the idea, with senior policy adviser Charmaine Crowe saying it ''shows what happens when the bean counters are let loose on social policy''.

''This policy might satisfy the bottom line, but it would have a devastating impact on low-income older people,'' Ms Crowe said.

''Lifting the pension age to 70 will force the least well-off to work till 70, while the better-off can enjoy their retirement at any age, thanks, in part, to the raft of tax breaks in superannuation from which they overwhelmingly benefit.

''This policy will see grandmothers and grandfathers joining the dole queue.''

Greens Senator Rachel Siewert said raising the retirement age was a ''simplistic'' response to the challenges of the ageing population.

She said such a change would have a disproportionate impact on some people, such as those who had performed manual work and women, who typically had little savings.

''Those people will live in poverty – that is not fair to many hardworking Australians,'' she said.

Asked about a Productivity Commission proposal for an ''equity release scheme'' for older Australians who own their own homes, to help pay for health and aged-care services, Senator Siewert said it was an idea worth pursuing.

She said government had a role to play in allowing older Australians to use their equity in their home to fund their retirement without placing themselves or their partner in hardship.

Senator Siewert said the Productivity Commission had previously made a number of sensible recommendations on how this could be done but neither of the major parties had seemed interested in taking them up.

The scheme proposed by the Productivity Commission would mean those who own their homes contribute half of the annual real increased house value to the government, which would then help cut government spending by about 30 per cent.

''An equity release scheme of this kind would still leave older households with an appreciating asset base and provide a means to increase the quality of services provided over the longer term,'' the paper, titled An Ageing Australia: Preparing for the Future said.

The paper projects that Australia's population will grow from about 23 million in 2012 to about 38 million by 2060, with a substantial increase in the number of retirees as people live longer.

That will mean lower overall participation in the workforce, and more pressures on governments to pay for higher health, aged care and pension costs.

''The best time to develop policies that address the inescapable implications of demographic change is while the transition is in its infancy. It is a good time to start a debate, and to float creative policy options.''

The report forecast Australia would have 4 million more people aged 75 years or older by 2060, with 25 centenarians for every 100 newborns, compared with one centenarian for every newborn in 2012.

It said Sydney and Melbourne would each have about 7 million residents.

with AAP

354 comments

All then that needs to happen is that you can get a job or good contract work at up to 70.

Commenter

Graham

Location

Collingwood

Date and time

November 22, 2013, 10:02AM

... or have been contributing to your Super scheme since you were 21 and are eligible for a indexed pension from 55...

Commenter

Outraged

Date and time

November 22, 2013, 10:17AM

Of course if this comes in, it won't be for another five years or so. Which means most of the baby boomers will be safe and make out like bandits.

As per usual.

Commenter

one generation's comfort

Location

above all...

Date and time

November 22, 2013, 10:20AM

What I'd like to see is the protected precious paper shufflers who come up with these ideas are made to spend their last 10 or 15 years of working life laying bricks or building houses etc. which is what they're condemning ordinary workers to.

After all, most paper shuffling can be done very competently at a relatively early age; it would open up the labor force to innovation, rather than the tired old never-worked, blame the victim methods of conservative 'thinkers'.

Commenter

BillR

Date and time

November 22, 2013, 10:23AM

@Graham, spot on. What fatuous hypocrisy from the productivity commission. Perhaps it's time to close down the productivity commission, then they would find out how easy it is to get a job in your sixties. Other options are:-Allow older people to put more into super.Look at health costs. Incomes for Australian doctors are often double and triple earnings in other countries. This forms a very large chunk of healthcare. I would have this would have been an obvious productivity issue to examine, but apparently not.

Commenter

Joseph

Location

Melbourne

Date and time

November 22, 2013, 10:23AM

Little chance of that from your mid 40's

Commenter

MST

Date and time

November 22, 2013, 10:24AM

And then roll over and die.

Commenter

Elle

Location

Sydney

Date and time

November 22, 2013, 10:25AM

or we could just stop trying to make people live longer.

Commenter

Eggbert47

Date and time

November 22, 2013, 10:31AM

I started working after school in year 9 and haven't stopped.Supported myself through uni, not asking for any assistance from the government. I've paid tax since my first job and am now in my 40's, able to support my family (we are blessed with 4 children),and have a mortgage.I would like to be able to retire and help my children with raising their children when the time comes, volunteer at different organisations and perhaps a bit of travel... Not have to work until 70, retire and drop dead!

Perhaps the time has come to take a closer look at those on Welfare - those that have never EVER worked a day in their life ie, have come straight out of school and received some kind of a benefit. The entire Welfare System within this country needs to be closely scrutinized.

Not sure how many will agree with the following, but perhaps those that have never been gainfully employed and receive benefits since leaving school should not be able to vote ie, If you want to be part of society and be heard then you need to contribute to society. Possibly the catalyst to move them into the workforce?? Therefore, not requiring workers to work till the age of 70.

Commenter

Ding Dong

Location

Rodd Point

Date and time

November 22, 2013, 10:35AM

It has to be introduced. Greece still has retirement age at 55 and most people there aren't contributing to society.50 years ago the average life span was 70, now its about 83.

They should introduce it slowly over say a 10-20 year period for people to adjust to it.Otherwise we condemn future tax payers or we reduce aged care benefits. Take your choice.